Nearly Half Of US Consumers Report Their Incomes Don’t Cover Their Expenses

Zero Hedge – by Tyler Durden

Low-income consumers are struggling to make ends meet despite the “greatest economy ever,” and if a recession strikes or the employment cycle continues to decelerate — this could mean the average American with insurmountable debts will likely fall behind on their debt servicing payments, according to a UBS report, first reported by Bloomberg.

UBS analyst Matthew Mish wrote in a recent report that 44% of consumers don’t make enough money to cover their expenses. 

The new survey asked 2,100 respondents in the US about their current financial situation, at least 40% of the respondents said they experienced a credit problem, if that was a rejection of a credit card or a missing payment, or perhaps defaulting on a balance that was due, this was a 3 percentage-point increase from last year, the survey found.

Mish has written before that lower-income consumers have seen very little net worth improvement in the last decade. They’ve increased their debt burdens significantly through credit cards, auto loans, and student debt.

As the federal funds rate drops, consumers are being squeezed by record-high credit card rates.

Given the high leverage of lower-income consumers, the next cyclical downshift in the consumer credit cycle could be much worse than the Dot Com bust, Mish noted in July.

Mish writes in the current report that there are no signs, as of yet, of an imminent downturn in the consumer credit cycle.

The analyst wrote that the UBS indicator that determines if consumer credit is turning stood at .10 through late September. High scores of the index are often associated with deteriorating consumer health, in 2001 and 2007 recessions, the indicator was approximately .70.

Mish said in the last six months, only 17% of consumers reported an improvement in their financial well-being.

As we’ve noted in the last several months, successful transmission of weakness from a manufacturing recession has filtered into services and employment. This means that the economic slowdown in the US has already broadened, now affecting consumers, and will lead to waning consumer health in the late year — just in time for the holiday season.

“The lower-income cohort led the deterioration, suggesting the lower-tier consumer remains under disproportionate pressure,” Mish wrote.

As the US economy cycles lower through 4Q, lower-income consumers are already coming under pressure.

Already, the percentage of student loans that are 90 days or more delinquent has jumped from a year ago. Auto loan delinquencies remain elevated from last year.

And it’s when the consumer shifts into a holding pattern, pulling back on all spending, that is when the broader economic downswing will be seen. A reminder, consumers account for 70% of US GDP.

9 thoughts on “Nearly Half Of US Consumers Report Their Incomes Don’t Cover Their Expenses

  1. The basics should be free of charge. Why are we paying for fuel, electricity, water for example? This is a no brainer. Why the hell are American Nationals paying for a piece of land? Why are American Nationals paying for medical care?

    These are the basics that we are being robbed from us. The simple solution is to sell our resources to guarantee these things free of charge to us.Not some piece of shit with a 85 meter yacht with a helicopter sitting on the deck. This is where we must start.

    What the hell did hundreds of thousands die for over 200 fkg years ago?


      1. Just watched it, incredible. Yeah those damned wind generators we have now are ridiculously complicated and dangerous as hell. Expensive as hell to operate, nothing more than a corporate goliath of cluster fk.

        Tired of all the bullshit, our people have the brains to get it done correctly and without all of the unneccessary bullshit.

        Awesome video Mary.

        1. Take out the windmills? My bird friends would love that one!

          There’s a boatload of wind generational stuff between Fort Stockton and the next town to the east along I-10, Ozona…and thousands upon thousands of birds of all kinds are killed by these things every year. Worse than jets, even.

          I wonder if the “environmental activist” celebrity hypocrites with their private jets going to “climate change confabs” every year give a crap about all the birds they kill with their damned jets… When soon-to-be-filthy-rich Greta Thunberg gets her own private jet soon enough, will she give a crap…and oh yeah, about the endangered furry animals, in her mink or sable?

    1. yeah , we’ve definitely been sold out … and we really do know who sold us out and shouldn’t allow them 1 more breath , yet we will

      Traitors 1 and all

    2. We just take back all that has been stolen without the due process of the law, and divide it up equally among the American nationals it was stolen from. Each of us would have a plenty to buy the best of whatever we choose.
      Throw out everybody that isn’t supposed to be here and there would be a nice piece of land for each American national. Let our forests as much as possible sit fallow for 100 years so that they might heal. Anything we need for anything we wish to construct would be for the individual.
      F-k industry that is the original rapist that has brought us to the edge of ruin.
      Unleash our best minds. Create the best technology to disintegrate any others around the world who pose a threat to our tranquility.

      1. Sums it up beautifully. I only wish I could stay alive long enough to see it come to full fruition. It will be a beautiful sight. But at least we can know we helped to echo-in the beginning stages of the great reclaiming of what is rightfully ours. Freedom is so worth the fight.

        On a side note… I do believe my soul to be eternal, so somehow I’ll probably get to partake of this Bill of Rights victory. Maybe I’ll live in Wyoming, beside a clear and clean-running river with thousands of trees on either side. There will be pine nuts and berries.



  2. “Auto loan delinquencies remain elevated from last year.”

    That includes many USED CAR loans, as well.

    I don’t know anyone who is doing better than last year.

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